New York: American multinational technology and
consulting corporation, International Business Machines (IBM) has reported its
worst quarterly revenue in 14 years as results from newer businesses including
cloud and mobile computing failed to offset declines in its traditional
businesses, sending shares down nearly five percent in extended trading.
The revenue of the world’s largest technology services
company fell by 4.6 percent to $18.68 billion in the first quarter, but has
beaten analysts’ average estimate of $18.29 billion. It was the 16th straight
quarter of revenue decline for IBM.
IBM has been moving toward areas such as cloud-based
services, security software and data analytics, while trimming its traditional
hardware business by exiting low-margin businesses, under the guidance of Chief
Executive Ginni Rometty. However, revenue in the company’s newer businesses is
failing to make up for declines in its traditional segments.
Bernstein analyst Toni Sacconaghi, in a research note
before results, wrote that the falloff in IBM’s traditional businesses was
dwarfing the company’s ability to capture new revenue.
Revenue from “strategic imperatives,” which includes
cloud and mobile computing, data analytics, social and security software, rose
about 14 percent in the first quarter. But revenue from the services and
hardware segments fell 4.3 percent and 21.8 percent, respectively, in the
quarter. Excluding items, IBM earned $2.35 per share, beating the average
analyst estimate of $2.09.
The company received a $1 billion refund in the
quarter that lowered its effective tax rate to a negative 95.1 percent compared
with 19.5 percent last year.IBM maintained its full-year adjusted earnings
guidance of at least $13.50 per share. Analysts on average were expecting
$13.55, according to Thomson Reuters I/B/E/S.
Up to Monday's close, IBM’s shares had risen 10.83
percent this year, compared with a 2.46 percent gain in the S&P 500 index.
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